Solar Plus Storage Company Seeks to Disrupt the Status Quo — Episode 105 of Local Energy Rules Podcast

Welcome to another episode of local energy rules, a podcast telling powerful stories about local renewable energy. This week, we’re talking about solar and energy storage in an era of coronavirus. And with me is Anne Hoskins, chief policy officer at Sunrun, the nation’s largest residential solar installer. Anne, welcome to the program.

And from there, I was offered the opportunity to serve on the Maryland Public Service Commission as a commissioner. And that was really an incredible experience. I filled out an open term for three years. And during that time I saw a range of really important issues relating to investments by utilities and reliability, some of the challenges related to upgrading a very old, natural gas distribution type systems, as well as a major, a merger case, the Exelon merger. And so through that experience, I learned a lot about, you know, how regulatory advocacy works before commissions. What I thought was effective, what I thought I needed more resources and really came away with a pretty strong feeling that there wasn’t a level playing field for participants in regulatory process, particularly for new entrance, or newer entrance that didn’t have the benefit, a group of rate payers paying for them, it’s pretty expensive. And the certainly I certainly saw this in some of those larger rate cases and merger proceedings. And so it made me think about, you know, where, where can I go next after that to help, you know, advance clean energy as well as a more competitive and distributed energy system, which, you know, I really have come to believe through some of the cases that I participated in and my earlier experience – all the way back to when I worked on wireless telecommunications – of the importance of having of competitive alternative that can push for improved technological solutions and also pushing towards, you know, bringing resources closer to the people that are going to use those resources. So fortunately as I was ending my term or after I ended my term at the Maryland commission and the opening came up at Sunrun, and Sunrun is the largest residential, solar and storage company in the country.

I had been on the East coast my entire career. And so it’s been big for me to move West to the headquarters out in California to work for Sunrun, but it’s been a really incredible experience over the last almost four years now, because again, I’m here at a time of tremendous change and I’ve been really fortunate in my career to be at important organizations during times of change. We’ve seen in the residential solar industry and what that has meant for changing the service that we’re able to provide to customers and also changing the ability of so our customers to provide additional value to the grid and be part of a larger energy system. So it’s been kind of a long journey to get here, but it’s all really okay, I mean, valuable experience that I, I draw on all the time as I try to think about how we can continue to expand access to these resources.

And then we have another value of places like in Hawaii, where it was really the first state to have a significant uptick of storage demand. And that was because they had, their regulators had changed on net metering quite drastically a few years ago, such that it limited the amount of energy that customers could share back to the grid. And as a result that gave customers incentive to store the power and use it for themselves. And so, you know, fortunately Hawaii has revised some of those rules so that more of that valuable energy can be shared with the grid, but it was an example of where technology stepped in to ensure customers could get value from their solar by adding a battery. And then the fourth kind of value that we’re seeing right now is what we’re referring to as grid services, where we’re working with utilities with CCAs in California, with the utility in Hawaii as well, to propose ways that we can aggregate hundreds or thousands of batteries and solar systems, and use that power to either replace the need for a generation source, such as a dirty peaking plant, or use it to, you know, provide reliability resources that utilities are required to purchase or use it just as a source of sort of demand response and reduction of stress on the grid, right?

So there’s a lot of different types of grid services that we’re finding can be provided by having a controllable resource, which is what batteries are doing, right. They’re allowing us to take a resource that, you know, historically had been viewed as, you know, you have to use it as soon as it’s generated to something that can be stored and controlled and a used when it’s maximum maximized value. So that’s been really significant changes in a short period of time. And in the States where we’re seeing that happen, again, very much are driven on those factors like where those, either the rate structure or where there have been serious environmental impacts from climate change, you know, related impacts we believe. And those would be, you know, California, where we saw very significant demand for this last fall, in the wake of the power shutoffs, as I said Hawaii, Puerto Rico and Massachusetts is another leading state. You know, in Massachusetts, they have a generous incentive program through their SMART program. So, you know, generally our sense is that for storage to take off, you need to consider the rate structures, but you also need some type of incentive, unless they’re just in a very kind of drastic situation such as they had in Puerto Rico, right, where customers really didn’t have access to power for months and months. And customers realized that this was, you know, essential for them to invest in a battery as well.

So we’ve been really pleased about the ability for us to reach customers. And also we’ve seen that because of the virus and the, the need for customers to shelter in place, I think customers are realizing, people are realizing how critical access to energy in their homes is. And so one of the things that I’m really concerned about in California as we approach wildfire season is that it will be quite devastating for people who are sheltering in place. Their electricity needs to be shut off in these PSPS events this summer, or this fall. If you can imagine folks who have run out and they purchased lots of frozen food and filled their freezers with it. And then they’re out of electricity for 24 hours or people who have medicine that needs to be kept refrigerated. All of those issues that we saw and we dealt with last fall, you know, it was customers were trying to find alternatives and you know, what we saw as some customers were coming for solar and batteries, but a lot of people I think still were not aware of the opportunity and then other customers were going out and buying these fossil generators, right? Which is very unfortunate. And we’re, we’re trying to get ahead of it and educate customers and work with utilities to make sure that when they’re sending information out to their customers, who are our customers as well or potential customers, but they include solar and batteries as an option because it is cleaner. And it’s, you know, it’s an option that, as I mentioned earlier, provides more benefits than just the backup. I mean, the backup will be very valuable when there is a power outage, but when there isn’t a power outage, it can use it for time of use. You can use it for grid services. You know, there are a lot of values that can be drawn from investing in solar and batteries. And that’s part of our challenge, you know, at Sunrun and in the industry is to be in those conversations so that people who are looking at alternatives and ways to protect themselves and be, you know, add to their security during outages, will consider, you know, solar and batteries.

So similar to how I felt I experienced when I was working in the beginnings of the wireless telecommunications growth, you know, it’s hard for incumbents to see that there could be another alternative, right. You know, it’s hard for, you know, there was once just, you know, a couple of long distance carriers now, wireline long distance that wasn’t that long ago, right? Now, none of us do that. I don’t even have a landline phone to plug in to talk to you right now. So if you think about that, you know, it’s not unusual that incumbents who have been granted a monopoly would be resistant, but at the same time, I do think that they are at the heart of it trying to serve their customers as well. And that’s really what we have to try to focus on together, is to realize we have joint customers and that their customers are looking for a way to supplement their source of electricity. And where I see we have common interest is that as these costs continue to go down for us and their cost curves continue to go up, that what you don’t want to do is get to a point where customers say, you know what, I’m just going to separate from the grid altogether, and that’s not that far away. And so what we are trying to do is to reach out to utilities and say, let’s please look at us as another source of generation, particularly, you know, we have, you know, restructured States where this should work, right? Look at us as another source of this, where you are really, you know, instead of thinking that you have to go and invest in a new gas peaking plant, that is probably going to be stranded in a decade, instead of doing that, let’s see what, you know, what kind of economic situation really could work here. And I think a lot of it’s going to come down to grid services because they are, you know, utilities are going to be facing the need to have to strengthen their grid. And they’re going to be facing questions from regulators about why they need to go and do it the way they’ve always done it before, when we have new technologies. So, you know, I think instead of kind of fighting that out through litigated proceedings, we should get together in a room and figure out, you know, what the options are. So for instance, we just put out sort of a concept paper called the neighborhood grid, where we saw an opportunity where we could work with utilities that would, you know, they would control the substation and some sorts of kind of Blackstar energy at that substation. You know, we could work to sell solar and batteries to a third of the residents in that neighborhood area. And that once you hit a certain percentage of, uh, essentially coverage of residents, that can be all the aggregated and provide a source of essentially, you know, an alternative source of energy to help serve that entire neighborhood. And that’s our concept. It’s not quite what you would call a micro grid, but it’s recognizing that, you know, we may be able to separate off portions of the grid and aggregate resources from customers in that area. So if you look at that example, you know, the utilities could make capital investments in the substation in, you know, maybe a larger battery connected to that substation or a small generation source. And we make investments with our customers in solar and batteries, and then, you know, we aggregate and manage those, but we’re available as a resource to the utility so that you could see by working together, that we could find a way where the utility is compensated for being that black start source and maintaining the substation and also managing the overall utility grid, which we’re going to continue to need.

I mean, there’s, unless, like I said, things get so contentious or so many fees are loaded on to sell our customers that it just makes more sense for customers to say, I’ll just support myself. That would just be so unfortunate because then you’re not optimizing those resources. So long answer, but I remain optimistic that there’s ways we can work together, but it’ll work a lot better if we don’t have these kind of in the dark of the night proposals to try to upend everything we’ve done, you know, but instead to come together and say, what can we do together to improve the grid and improve the energy system?

But I do think that it’s really important that we ask those questions of, you know, where do utilities have the comparative advantage, right? And I think where they do in my mind right now is that we do need a distribution network. And if you envision a future where, you know, five years from now, again, like I said, look at the growth already and batteries, you know, a few years from now, we have hundreds of thousands of batteries around the country from all these different providers. And that’s a huge resource. There are questions about how do you actually manage that, right? How do you use those resources and the process of doing that when you have, you know, it’s not just going to be Sunrun, you know, I’d love it if it was, but it won’t be, right? There’s going to be a lot of different providers of this and customers are going to have different kinds of systems. So you’re going to need essentially a distribution system operator, like we have RTOs and ISOs, right. And so that’s an important role. And that’s one that, you know, it was an easier job to do when they controlled all the resources, right? But they, they’re not going to control it all. So that to me is something that will bring value and they will be particularly well situated to do. And then, you know, again, you are still going to, you know, likely going to need some centralized generation. We’re going to have transmission lines to go out to, I’m not saying the whole future is just distributed, right? We have lots of great opportunities with offshore wind with, you know, onshore wind, solar, those prices continue to fall as well. So operating that and that interaction between the distribution system and the larger grid. There’s plenty to do, I guess is my point.

I just think we need to approach it as, you know, how do we have a goal? Like what are our goals as society? And this is where I think incentive rate making makes a lot of different, important role too. What are we trying to achieve here? You know, we need affordability, need reliability, we need cleaner energy. And if you look at the, if you go on the websites and our leading utilities, they pretty much, I’ll say that that’s what they’re aiming to do. Right? They want to have clean, affordable, reliable energy. And we say, we want to have clean, affordable, reliable energy. So let’s figure out how to do that together and, and really focus on how we can optimize where you can get that solution, you know, the best.

So that’s number one. And then I think on the, on the substantive policy side, I think there’s so much potential in batteries and we’re just at the beginning and we’ve seen some States, you know, California, where the SGA program, you know, Massachusetts, you know, with their incentive, SMART incentive program. These are really important to bring down the cost of batteries and help expedite that, move down the cost curve, which is going to then, you know, expand demand, continue to move the cost down, the cost curve and get it so that there’s more and more people you can have access to this resource because batteries have really enabled us to draw so much more value from the sun and from those solar panels that we can put on people’s roofs. So I think that a big push in the coming year should be for advocates to help share the information of the potential of batteries to regulators and policymakers around the country. You know, I’m heartened that I know there are some proceedings I think about to start in Connecticut, in New Jersey. These are States that I know from, you know, living in the Northeast, you know, most of my, in Mid Atlantic most of my life, been really fortunate in the last few years, not to have those big hurricanes, but when that happens, we’re going to see a repeat of what we’ve seen out here in California, the wildfires where customers are going to say, you know, I really wish I had my own source that I could, I could rely on when the larger grid doesn’t work. So that’s what I think will be really important and exciting for advocates to learn about and engage in, in the coming year.